he Treasury Department on Tuesday set broad rules for a new tax on stock repurchases that had been created under a law signed by President Biden earlier this year, largely rejecting business lobbyists’ efforts to narrow its scope.
The initial guidance was issued ahead of more detailed regulations that are expected to be released early next year, reports The New York Times.
The nonpartisan Joint Committee on Taxation, which provides official estimates of tax policies in Congress, projected that the buybacks tax would raise nearly $74 billion over the course of a decade.
Business groups had sought to whittle that number down, by excluding certain types of buybacks from the tax. Treasury officials appeared to agree to only one of them, which concerns SPACs.
If a SPAC forms but cannot find a company to buy within two years, it must return investors’ money to them — effectively buying back their shares. The Treasury guidance does not treat that liquidation as subject to the buyback tax. But otherwise, the guidance rejects industry attempts to narrow its scope. Read more.